If you’ve been to a regional shopping mall in the last few years, you may have noticed its changing landscape, especially compared to malls that we fondly remember from the 1980s and ‘90s. Film director Amy Heckerling made the shopping mall memorable in her films, “Fast Times at Ridgemont High” and “Clueless.” Mall rat was a popular slang term given to kids who would spend entire weekends hanging out at the mall. This is not the case today.
But, despite unprecedented competition, mall operators/developers are finding new ways to keep malls thriving and relevant, where customers can interact with unique and growing brands and have a good reason to come to the mall to enjoy their experience—versus shopping online or in other types of brick and mortar retail. In order to do that, they are focused on new “relevant and experiential” retailers and entertainment concepts to set up shop in their properties.
It’s true: redeployed malls will not look like our nostalgic versions of the ’80s and ‘90s malls lined with the familiar faces of old reliables such as Jordan Marsh, Mervyn’s, Delia’s, Kay-Bee Toys, Casual Corner, Waldenbooks, and Spencer’s Gifts. But they aren’t going extinct, either. In fact, the International Council of Shopping Centers has reported that mall sales have risen each year since the recession, from $383 per square foot in 2009 to $467 per square foot last year. That’s an increase of 22 percent. Sales per square foot among mall REITs are up 36 percent since 2010.
These sales results are due in large part to the strategic and entrepreneurial mindset of the mall owners. The large, more institutional mall owners—Simon Property, GGP, Taubman, Macerich, Westfield, etc.—are not allowing the reports of their demise to become reality. Instead, they have gotten aggressive with new strategies centered around the changing customer—one who wants relevance, a great experience, and strong customer service as part of his or her shopping experience. In other words, the thinking is, give consumers something they can’t experience or enjoy online. For example, popular brands such as Tesla and Apple have helped malls stay a destination-driven shopping experience for new products as they provide these brands’ latest offerings. Entertainment and restaurants are becoming the new anchors in the malls. Fashion shows, concerts, art galleries, and similar events drive traffic into the malls and are ways for customers to become more personally attached to the malls, something online shopping cannot offer.
All this said, there will also be a large number of lower-quality properties that will continue to change, downsize, and/or close. These malls operators will look at non-retail tenants to reinvent these properties and keep customers coming in for reasons other than a shopping spree. Government annex offices, community colleges, distribution centers, and medical uses are now going into these malls.
So, while we may always have a nostalgic twinge for how the mall used to look, we can stop holding our breath and wondering if malls are going the way of many of their old retail tenants: business remnants of the past. Entrepreneurial vision and strategic positioning of new and exciting brands are going to create the malls of the future, maintaining their relevancy and purpose for us “old folks” as well as the new wave of consumers.
Mall operators are standing by.
Alan Shor is the president and co-founder of The Retail Connection.